I cannot deny it.
While I am a bottom-up investor who pick stocks for their long-term prospects, my portfolio has benefitted from a macro decision.
The decision by Fed to cut rate has led to the strong return of my portfolio over the past quarter, resulting in a year-to-date return (YTD) of 11.5%.
Breaking it down, the SG portfolio has experienced a positive turnaround, primarily driven by the anticipated and subsequent rate cut, which has boosted the returns of both REITs and Banks counters.
The increased yield spread between these stocks and Singapore Savings Bonds and T-bills, both of which have recently dropped below 3%, is likely driving investor interest.
Despite its turnaround, the SG portfolio continues to lag the SPDR Straits Times Index ETF (SGX: ES3), with the gap widening.
Unless something miraculous happens in the last quarter, it is likely to underperform the benchmark this year.
US portfolio is still churning along well, and would have an even stronger return if not for recent strengthening of Singapore Dollar. Nonetheless, it continues to be ahead of S&P 500 ETF (NYSE: SPY).
However, given my US portfolio is a lot more volatile than SPY, I’m hesitant to forecast sustained outperformance for the remainder of the year.
YTD Dividends doubled in 5 years!
I was surprised that my YTD cumulative dividends doubled in five years.
However, upon closer inspection, I realised this growth is temporary, as I am expecting lower dividends in the next quarter relative to the fourth quarter of 2020.
This is primarily attributed to my sale of Micro-Mechanics Holdings Ltd (SGX: 5DD) shares and the company’s lower final dividend since last year. I hope that the likely recovery in the semiconductor industry next year will lead to higher dividends.
For more details on the dividends received for the quarter, you can refer to the following two posts.
Top and Bottom 5 Performers
While the ranks are never an indication of how good or bad the underlying business is over the long-term, I still find it interesting to rank my portfolio’s top and bottom performers.
This not only helps me identify the stocks that contributed to my portfolio’s success, but also highlights laggards that might potentially become investment opportunities.
Let’s begin with the top performers.
The business world is dynamics. With many moving and interconnected parts, businesses can be affected by various factors.
For instance, Shockwave Medical was acquired by Johnson & Johnson and CrowdStrike Holdings (NASDAQ: CRWD) caused the July global outage, resulting in the removal of these previously top-performers from the list.
Arista Networks, Inc (NASDAQ: ANET) continues its steady progress through the year, claiming the top position for Percentage category. It cemented its position as the top contributor towards my portfolio’s performance.
Intuitive Surgical, Inc (NASDAQ: ISRG) is a surprise entry. It looks like market is anticipating good growth from its latest da Vinci 5 system.
On the other hand, Nvidia Crop (NASDAQ: NVDA) has dropped in its ranking simply because I added more at a higher price.
The strong performance by Singapore Banks also see them taking top spots for both categories.
Finally, being one of my top holdings, ParkwayLife REIT (SGX: C2PU) has propelled itself into the top 5 for the Absolute category, after its price surged by nearly 20% over the past two months.
Now let’s discuss the laggards.
Despite a record 2Q 2024 results, iFAST Corporation Limited (SGX: AIY) continues to be my biggest loser in absolute term.
Although I maintain my confidence of its ability to execute its growth plan, I choose to just retain my current stake.
While it is tempting to increase my position, given that it’s already one of my largest holdings, I don’t see the need for further exposure.
If the company proves to be a worthwhile investment, my existing stake should provide substantial returns. Conversely, if things take a turn for the worse, the potential damage to my portfolio is limited.
With the exception of Mapletree Logistics Trust (SGX: M44U), or MLT, the other REITs have found their way out of the bottom.
As interest rates are expected to continue decline in the near future, the REITs in my portfolio should benefit from favourable market conditions.
Shopify Inc (NASDAQ: SHOP) has also risen above the bottom five, replaced by Zscaler, Inc (NASDAQ: ZS). This development benefits the portfolio’s return due to my larger position in Shopify.
That said, I increased my stake in Zscaler when its price plunged recently.
Finally, I’m anticipating potential recoveries for AEM Holdings (SGX: AWX) and Micro-Mechanics in the coming year.
What’s up for the final quarter of 2024?
For the upcoming earnings calls, particularly for Singapore banks and REITs, I’ll be monitoring management’s perspectives on the declining interest rates.
While I anticipate their guidance to align with previous expectations, the recent rate cut might have introduced new factors worth considering.
Assuming no unexpected developments, dividends received will exceed those of the previous year.
Given the recent price appreciation of MIT and MLT, I’m still considering whether to continue participating in their dividend reinvestment plans, should they be offered.
As usual, I don’t project how the market will move, especially over the short-term.
However, if the rally continues and yields another 8-10% return, I might take some money off the table closer to the year-end.
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